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Cumulative Delta: to reset or not to reset?


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Cumulative Delta: to reset or not to reset?

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  #1 (permalink)
VinceField
Coronel Vivida, Parana/Brazil
 
 
Posts: 47 since Oct 2020
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I was wondering what advantage there could be for resetting cumulative delta after a certain period of time if it is used for divergence trading? The issue with having it reset is that it breaks the sequence, so divergences around that area wouldn't be spotted. Am I right that the only difference resetting the cumulative delta has is on the value of the bars, and if using it strictly for divergence spotting, it would be best to have it continuous and not reset?

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 matthew28 
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I remember Market Delta had a continuous cumulative plot but a lot of platforms just reset it at the start of a new trading day. Unless you are swing trading on a chart looking at new highs or lows compared to previous ones of different days I don't see that it makes any difference if using it as a divergence indicator for intraday day trading as, like you say, it is only the value of bars that changes. ie. The shape of the Cumulative Delta plot is exactly the same, it is just at a higher or lower point on the Y axis if reset.

So if using CD intraday in the same way one might use RSI to spot divergence, eg. Price makes a new swing high on a 5/15/30 whatever minute chart but CD doesn't maybe suggesting a selling opportunity, there is no change in the relationship of the CD highs and lows to each other whether reset or not.

(And if you do want a divergence indicator for longer term swing trading, then use RSI).

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9nix6
Gdansk / Poland
 
 
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If you are an intraday trader (not a swing trader), you should reset CD on each trading day. From my experience, this gives more concise information. However, this is my opinion. I trade intraday on renko charts which I also synchronize to the daily open each new day. I do this for consistency - this way my charts always start building from the daily open.

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